How Forced Arbitration and Non-Disclosure Agreements Can Perpetuate Hostile Work Environments

The legal tools can prevent workers from taking legal action or disclosing sexual harassment and assault.

November 30, 2017

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With sexual-abuse scandals bubbling out of Hollywood, Capitol Hill, and corporate boardrooms nationwide, you might wonder why the accusers kept their suffering a secret for years, before realizing in recent weeks that they weren’t alone. There’s more than fear behind their silence: Their lips were sealed with a signature. In Harvey Weinstein’s case, “non-disclosure agreements” (NDAs) effectively bound victims to secrecy, barring them from publicly revealing their stories.

NDAs are part of an arsenal of legal tools that employers have at their disposal to protect their reputation and their bottom line—but those tools often come at the expense of wronged employees. Another is “forced arbitration,” a provision in many employment contracts that requires employees to channel their workplace disputes through an extralegal negotiation process, rather than through the courts. Under Obama, the Consumer Financial Protection Bureau had banned forced arbitration in employment contracts, but last month Trump and Congress killed that protection.

According to the National Women’s Law Center (NWLC), both forced arbitration and NDAs have in many workplaces become a standard tactic to preempt workers from taking legal action or disclosing sexual-harassment and -assault charges. These agreements force workers to sign away their rights in exchange for a job, by making them agree to settle future disputes outside the courts through an opaque negotiation process controlled by management and lawyers—effectively sentencing women to silence before they ever step into a courtroom.

A case study is journalist Gretchen Carlson’s ordeal with Fox News mogul Roger Ailes. After suffering repeated harassment and retaliation by Ailes and Fox, Carlson was reportedly blocked from going public with her story because her prized media job came with a clause that would automatically channel future disputes into arbitration proceedings. The contract ensured that in the abuse case she eventually settled “all filings, evidence and testimony connected with arbitration, and all relevant allegations and events leading up to the arbitration, shall be held in strict confidence.” The language is unusually restrictive, but probably within the law.

As formal contracts, gag orders could be justified on the assumption that they are mutually agreed upon between private individuals. Theoretically, arbitration could offer a more efficient way of settling corporate disputes and supposedly save both the accused and the accuser the trouble and cost of protracted litigation. But in a corporate culture where men feel entitled to women’s bodies, where women are taught to get ahead by doing as they’re told and their career prospects hinge on the approval of powerful men, there’s little stopping arbitration from becoming an extrajudicial arena for covering up abuse.

The Equal Employment Opportunity Commission estimates that 75 percent of abuse incidents go unreported, yet “anywhere from 25 percent to 85 percent of women report having experienced sexual harassment in the workplace.” Many are deterred by fear of retaliation—three in four respondents feared being re-victimized, in other words, for speaking out. But the commission also stresses that forced arbitration works against the public interest “by requiring individuals to submit their claims to private arbiters rather than public courts,” and the ability to rely on forced arbitration “can also weaken an employer’s incentive to proactively comply with the law.” Both policies, non-disclosure and mandatory arbitration, drive consumers and workers into silence and powerlessness by keeping their cases out of court.

Under Trump, who has himself deftly wielded the law to thwart sexual-abuse allegations, it’s unlikely that regulators will act to rein in NDAs and forced arbitration. Some workers may try to press their claims through the human-resources office at work, but advocates warn that these tend to actually serve corporations more than victims, as they often steer women toward settling disputes to avoid the courts. Even more useless are token mandatory “workplace trainings” that are often reduced to perfunctory video screenings or box-ticking workshops with little real effort to change systemic behavior or workplace mentality.

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But if these problems are rooted in our legal codes, then dismantling the structural factors enabling abuse requires serious reform. According to NWLC Vice President for Workplace Justice Emily Martin, “Congress could act to prohibit employers from requiring mandatory arbitration of harassment and discrimination complaints.” President Obama attempted to do this when his Consumer Financial Protection Bureau imposed a rule limiting arbitration for consumer-fraud cases. But the fact that that rule was just rescinded, Martin notes, shows that “so far, a majority in Congress has been more interested in rolling back” current protections than in creating new ones. The conservative lawmakers who promote arbitration as a substitute for public justice aren’t likely to make an exception for private litigation over sexual abuse.

Martin stresses, however, that existing regulatory policies could be used to boost civil-rights-law enforcement—for example, by restricting very broadly worded NDAs that gag workers from disclosing discrimination based on gender or race. Similarly, it’s in theory illegal for companies to suppress labor organizing, but corporations have nonetheless developed sophisticated campaigns to dissuade employees from unionizing. So lawmakers could make it easier for workers to challenge these union-busting tactics. Under this administration, neither the Labor Department nor the National Labor Relations Board is likely to strengthen safeguards for workers. Trump has appointed a pro-business NLRB majority, which is now poised to weaken worker protections and increase barriers to unionization. Additionally, the White House has systematically moved to undermine labor and safety regulatory agencies by repealing Obama-era pro-labor executive orders. He directly targeted gender-equality protections by repealing Obama’s executive orders promoting compliance with civil-rights and anti-discrimination regulations for federal contractors, including a rule that would bar forced-arbitration clauses for sexual-harassment cases.

It is possible for state lawmakers to crack down on corporate abuse of arbitration and non-disclosure agreements, but the prospects do not seem good. The system simply encourages workers to resign themselves to the assumption that climbing the career ladder means losing your voice.